Judge Rejects Request to Block $1.776 Billion Settlement Fund

A federal judge on Wednesday denied a government watchdog's request for a temporary restraining order against a planned $1.776 billion settlement fund. The fund was established last month to resolve a lawsuit against the Internal Revenue Service over the leak of tax returns.

Court proceedings District Judge Richard Leon ruled from the bench in favor of the administration. Leon said he accepts the acting Attorney General's representation that the government is scrapping its plans for the fund. "Don't play possum with this court," Leon told a government attorney.

Leon said he will consider a separate request for a preliminary injunction that would block payouts on a more permanent basis.

Separate litigation A different federal judge in Alexandria, Virginia, has already temporarily blocked the fund's operations. District Judge Leonie Brinkema's order is due to expire Friday unless extended after a hearing. The Justice Department has not formed the five-member commission that will decide on payout criteria. No money has been paid out and no claims have been accepted.

Background and reactions The fund has generated bipartisan backlash.

During congressional testimony, the acting Attorney General said the government is not moving forward with the fund. "We are not moving forward with the fund, period," the acting Attorney General said at the House hearing. A federal judge in Florida ordered attorneys to respond to allegations that the president abandoned claims to avoid court scrutiny.

District Judge Kathleen Williams gave them until Friday to respond in writing. In Virginia, attorneys from Democracy Forward are seeking a court order halting the fund's implementation. The plaintiffs include a fired prosecutor and a college professor acquitted of assaulting federal agents at a protest.